Latest / Best of Business / Nicola Willis: Finance Minister on her plan to boost up Kiwibank so it can compete with the bigger banks

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Nicola Willis: Finance Minister on her plan to boost up Kiwibank so it can compete with the bigger banks · Best of Business

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  Speaker 1: You're listening to a podcast from News Talks. There'd be
• 0:12
  Speaker 1: follow this and our wide range of podcasts now on iHeartRadio.
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  Speaker 2: With us right now is Nicola Willis the Finance Minister.
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  Speaker 2: Nicola Alo, hello here that do you know much about
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  Speaker 2: this announcement on the building from Chris Penk today?
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  Speaker 3: He is your expert on that one. But look, this
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  Speaker 3: is all part of our mission to make it simpler
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  Speaker 3: and quicker, to get a building consent and to build
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  Speaker 3: a house. Yeah.
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  Speaker 2: Because the reason I'm raising it with you because we
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  Speaker 2: spoke to him about an hour ago. But since then,
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  Speaker 2: I've been getting a lot of texts suggesting that his
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  Speaker 2: plan's not going to work because basically it puts the
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  Speaker 2: risk on the builders and their insurers. But insurers don't
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  Speaker 2: ensure for defective work. Do you know if that's the case.
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  Speaker 3: Well, I know that he will have taken a lot
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  Speaker 3: of advice on this and he is intending to make
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  Speaker 3: it simpler. But look, feedback from those building industry is
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  Speaker 3: always relevant, and I'm sure that he'll keep working with
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  Speaker 3: those at the cul face. Yeah.
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  Speaker 2: Also, what happens if, for example, Duval is listed as
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  Speaker 2: one of these trust and builders that can check their
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  Speaker 2: own work, right, but then they end up in the
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  Speaker 2: situation that Duval has there is defective work. Who pays? Then?
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  Speaker 2: Does it not just come back on you and I
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  Speaker 2: the taxpayer?
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  Speaker 3: Well, how those liabilities for depends, of course, in terms
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  Speaker 3: of the whole receivership situation and where the funds sit
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  Speaker 3: and who's responsible at the various But so I'd hesitate
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  Speaker 3: to answer that example without having worked all of that through.
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  Speaker 2: Yeah, fair enough, Okay, listen, I'm Kiwibank. Do you like
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  Speaker 2: this listing idea? Well?
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  Speaker 3: As you know, I like the idea of Kiwi Bank
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  Speaker 3: getting bigger. To get bigger, it needs the capital for growth,
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  Speaker 3: and my viewers that capital can come from more places
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  Speaker 3: than just the government. I've been seeking advice from Treasury
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  Speaker 3: on what the best way is to raise that capital
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  Speaker 3: and I'll be taking some recommendations up to Cabinet in
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  Speaker 3: the next little while.
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  Speaker 2: Why do we need another bank if we've got four?
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  Speaker 2: I mean four is actually quite a lot right to
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  Speaker 2: be competing against each other. If we've got four and
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  Speaker 2: we're not happy with what they're doing, why do we
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  Speaker 2: think a fifth one's going to change things?
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  Speaker 3: Well? What the comment is Commission of said is that
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  Speaker 3: before we have are a functional oligopoly. So rather than
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  Speaker 3: competing for market share, which is when you get all
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  Speaker 3: of the good things of competition like better prices, more innovation,
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  Speaker 3: better services, they're feeling very cozy and relaxed about just
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  Speaker 3: hanging on to their current market share and competing around
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  Speaker 3: the edges on I'm making as much profit as they
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  Speaker 3: can as individual banks. That's not a good situation for
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  Speaker 3: New Zealand bank users. So what the Commerce Commission have
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  Speaker 3: said is, look, you need someone else in that market
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  Speaker 3: to be disrupting. There's a couple of ways that can happen.
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  Speaker 3: One through a big disruptor such as kiwibank. Another way
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  Speaker 3: is through getting more other financial companies competing on different
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  Speaker 3: kinds of products. So we want to achieve both of
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  Speaker 3: those things. And if you look over to Australia, they
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  Speaker 3: had a similar cozy oligopoly situation happening. Macquarie Bank played
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  Speaker 3: quite a disruptive role in that market and the result
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  Speaker 3: better deal for everyday bank users.
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  Speaker 2: But how do we know that New Zealand posts once
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  Speaker 2: it's kind of reached its maximum share market share, won't
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  Speaker 2: just settle into a nice little or oligopoly situation as well.
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  Speaker 3: Well, what you ultimately want is each of those entities
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  Speaker 3: to be competing harder, and from my perspective, I don't
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  Speaker 3: just want Kiwibank offering innovative products and services and good pricing.
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  Speaker 3: I want it to be nipping so hard at the
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  Speaker 3: heels of the big banks that they are forced to
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  Speaker 3: do the same. And so I don't just see that
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  Speaker 3: as sitting on the shoulders of Kiwibank. I also want
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  Speaker 3: to see some of these new FinTechs coming through offering
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  Speaker 3: more disruptive products. I think there can be a bigger
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  Speaker 3: role in the future for non bank deposit takers and
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  Speaker 3: non bank lenders, so the likes of the finance companies,
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  Speaker 3: the building societies, that sort of thing. And what the
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  Speaker 3: Comments Commission report helpfully said was, look, if you actually
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  Speaker 3: got the regulation in this area a bit better, a
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  Speaker 3: lot of which is done by the Reserve Bank, is
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  Speaker 3: every reason to believe those entities will compete more. So.
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  Speaker 3: This is a classic one either where that boring word
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  Speaker 3: regulation actually really matters. If we get the ground rules right,
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  Speaker 3: we'll get better competition.
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  Speaker 2: Do you know yet who your Wellington Crown observer is
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  Speaker 2: going to be no, and.
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  Speaker 3: That is a decision for Simon Brown, and it's one
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  Speaker 3: that I'm leaving him too.
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  Speaker 2: And do you know how long he's going to take
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  Speaker 2: making that decision.
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  Speaker 3: No, But I do know there's a ten day period
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  Speaker 3: between him having informed Wellington so that he counts for
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  Speaker 3: of his decision and leaving them to give feedback on that.
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  Speaker 3: So we still haven't run out that too.
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  Speaker 1: I don't know.
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  Speaker 2: I don't know if they're going to be able to
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  Speaker 2: meet the ten day thing because I don't know. If
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  Speaker 2: you saw they had a twenty three minute meeting and
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  Speaker 2: then they broke for morning tea today.
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  Speaker 3: Well, I can tell you that kat Kevinet doesn't take
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  Speaker 3: good approach.
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  Speaker 2: Well, thank god, because otherwise would sack the lot of you.
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  Speaker 2: And fortunately we get that opportunity with them soon. Hey
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  Speaker 2: have you been surprised by the reaction to the school lunches.
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  Speaker 3: I have been, because to me, this is just a
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  Speaker 3: win win win. You get your school lunch program continue
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  Speaker 3: going into the future. That by the way, Labor didn't
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  Speaker 3: put money aside to fund, but we found the money
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  Speaker 3: to fund it, and you get it done at a
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  Speaker 3: much lower cost per pupil, so down from as much
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  Speaker 3: as nine dollars ahead to more like three dollars ahead,
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  Speaker 3: and it's nutritionally good food. So I think this is
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  Speaker 3: a good solution and it's something that where the government
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  Speaker 3: should be proud of totally.
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  Speaker 2: And people are weird about it. But here's the one
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  Speaker 2: thing that I see as being a problem. Right, are
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  Speaker 2: you absolutely absolutely sure that you have done all of
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  Speaker 2: the things you need to do dotted the eyes and
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  Speaker 2: cross the tea so that Compass group doesn't stuff you
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  Speaker 2: guys in the end with crap food.
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  Speaker 3: Well, look, they're required to meet a series of guidelines,
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  Speaker 3: and the nutritional guidelines are the same as they were
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  Speaker 3: for the program previously, so there hasn't been a change here.
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  Speaker 3: And realistically they'll need to use a range of local
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  Speaker 3: suppliers right, getting good nutritious products from the end. So
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  Speaker 3: I think this is a situation where there's no guarantee
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  Speaker 3: that a contract continues forever. They need to perform in
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  Speaker 3: order to get that contract. But by being more a
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  Speaker 3: faire by getting a decent competition up, we're getting a
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  Speaker 3: better price for everyone and that benefits the tax payer.
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  Speaker 3: And actually David Semol has managed to get the program
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  Speaker 3: running in a way that it can be more sustainable
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  Speaker 3: for the future.
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  Speaker 2: Hey, so I loved your speech where you told the
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  Speaker 2: public servants to give you some bold ideas. Do you
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  Speaker 2: reckon that that is it going to happen? I mean,
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  Speaker 2: it's one thing to say to them, I'm here to
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  Speaker 2: hear your crazy, kooky ideas, but it's quite another for
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  Speaker 2: them to have the courage to come to you with them.
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  Speaker 3: Well, it needs two things. The first is it needs
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  Speaker 3: ministers who are prepared to listen. And I can tell
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  Speaker 3: you honestly, we are talking to all of the New
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  Speaker 3: Zealanders who feel the same frustration that we do that
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  Speaker 3: New Zealand hasn't been growing as fast, it hasn't been
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  Speaker 3: delivering as good as services as they want to see,
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  Speaker 3: and New Zealanders want bold ideas. So I think our
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  Speaker 3: ministers are poised to listen. The second thing that it
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  Speaker 3: requires is that public agencies themselves put forward the disruptive ideas,
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  Speaker 3: and that often means putting in lights the ideas from
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  Speaker 3: the people who are second or third tier in the organization,
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  Speaker 3: who are looking at problems differently from the way leaders
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  Speaker 3: in the past have done. And look between me and
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  Speaker 3: the Prime Minister and other ministers, we've put a real
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  Speaker 3: emphasis on this. Bring forward the fresh thinking, bring forward
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  Speaker 3: the young, disruptive people, the new people who have different perspectives,
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  Speaker 3: because if we do things the way we've always done them,
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  Speaker 3: we will get the same result and that is not
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  Speaker 3: good enough. We need to do much better too.
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  Speaker 2: Right now. On the performance pay, which is also something
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  Speaker 2: that you've spoken about in the past week, are you
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  Speaker 2: going to this is the bosses. Are you going to
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  Speaker 2: drop their base salary back in order to then add
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  Speaker 2: performance pay on top or does the performance pay just
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  Speaker 2: get added to what they're already earning.
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  Speaker 3: It has to be additional because there are existing employment
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  Speaker 3: agreements that exist between the Public Service commission and chief executives.
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  Speaker 3: So you can't after the fact renegotiate that and say
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  Speaker 3: some of your pay is at risk. So the employment relationship,
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  Speaker 3: as you'll appreciate, is not between minister and chief executives.
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  Speaker 3: It's between the Public Service Commissioner and chief executives. And
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  Speaker 3: so what we've asked the Commissioner to do is to
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  Speaker 3: design a performance pay scheme and so that will advised
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  Speaker 3: to sit on top of their current payer arrangements. But
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  Speaker 3: we want it to be very strict that they would
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  Speaker 3: only get these bonuses if they deliver performance to New
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  Speaker 3: Zealanders above and beyond the status quo. And I have
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  Speaker 3: been working with the Public Service Commission to say, let's
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  Speaker 3: make this as transparent and accountable as possible, so New
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  Speaker 3: Zealanders can see for themselves what's required for a bonus
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  Speaker 3: to be paid and whether or not it's been paid.
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  Speaker 2: Nichola, listen to you. Guys at the ministerial level have
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  Speaker 2: the ability to go to New Zealand posts and say,
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  Speaker 2: all right, enough with the sort of like death by
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  Speaker 2: a thousand cuts non sense. Just cut the mail back
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  Speaker 2: to one delivery a week for everybody for the rest
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  Speaker 2: of time.
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  Speaker 3: The end, well, I guess that would be just middling
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  Speaker 3: at a degree of operational detail that we don't think
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  Speaker 3: is necessary, because instead what we say to them is, look,
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  Speaker 3: we want you performing.
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  Speaker 2: Well as you how many million dollars.
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  Speaker 3: Yeah, so they haven't been performing well. So that's why
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  Speaker 3: they've come to us and said, Okay, in order for
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  Speaker 3: that to happen, we're going to need to make some
• 9:21
  Speaker 3: changes to our business model, including reducing some of our
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  Speaker 3: delivery days. And they've gone out for consultation on that,
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  Speaker 3: so they go out for consultation on that with our blessing,
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  Speaker 3: because we're realistic. You know, the male model has completely
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  Speaker 3: changed and in order for that business to be viable,
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  Speaker 3: to be sustainable into the future, they're going to have
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  Speaker 3: to change the way they do some things.
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  Speaker 2: Do you get any mail that you love?
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  Speaker 3: No, I do. In my beehive office, I occasionally get
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  Speaker 3: a lovely little handwritten note and it tends to be
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  Speaker 3: from someone either very young or quite elderly, and it
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  Speaker 3: can be very sweet.
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  Speaker 2: I love it. Hey, Nicholas, thanks very much appreciated Nichola,
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  Speaker 2: Willa's Finance Minister.
• 10:00
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